The question of the day was how much money can Canada spend in the fiscal year 2010-11. Minister of Finance James Flaherty unveiled the federal budget for the year 2010 on Thursday in Ottawa. The Finance Minister promises to continue the remainder of the stimulus for this year. He also stated that the deficit is important and pledges that it will be temporary.

The new budget will continue on with stimulus spending already announced but other temporary measures are in place now.

Last year the government used $37 billion in economic stimulus. According to Flaherty the Budget 2010 aims to contribute to the economic recovery. How do they accomplish it? It says that $19 billion will be used for new federal stimulus in Year 2 of Canada's Economic Action Plan. The Budget announced in the past that it would concentrate on jobs and "growth for the economy of tomorrow."

The $19 billion will be cut into pieces. The new stimulus for 2010-11 includes $3.2 billion in personal income tax relief; over $4 billion in additional benefits, training opportunities and Employment Insurance premium relief to help unemployed Canadians; $7.7 billion in infrastructure stimulus to create jobs; $1.9 billion to create the economy of tomorrow and $2.2 billion will be used to support industries and communities.

Jim Flaherty said the budget's concentration is on creating jobs and growth, sustaining Canada's economic advantages and including a disciplined plan to return to balanced budgets in the future. "We present today a jobs and growth budget," said Minister Flaherty. "In this budget, we are completing our Economic Action Plan to create jobs now. We are taking additional measures to protect existing jobs and create new jobs. We are also looking ahead to secure our long-term economic growth."

What Canadians may like is the fact that the Government is pledging it will not raise taxes or cut major transfers for health care, education and pensions. The Finance Minister has a pretty rosy vision of the declining the deficit. As a result of the expiration of the Economic Action Plan and the measures in this budget, the deficit is projected to decline by almost half over the next two years to $27.6 billion in 2011-12, and by two-thirds to $17.5 billion in 2012-13. In 2014-15, the deficit is projected to be $1.8 billion. The debt-to-GDP ratio is expected to peak at 35.4 per cent in 2010-11 and then fall to 35.2 per cent in 2011-12 and 31.9 per cent by 2014-15.

Mr. Flaherty realizes that the recovery is fragile and he worries that the economy could turn back down at any moment. But the government has concentrated on the most important tasks and is trying to balance what is the most needed right now.

Of course, not everyone is happy. Budget lockup and Parliament Hill was full of politicians and experts from different areas who say that the Budget did not fulfill their hopes.

However, the most important tasks of the government is creating jobs and balancing deficit. Flaherty's "novel", the 451 pages long budget was not appreciated by NDP leader Jack Layton: "This is a budget that has completely left behind the victims of the recession. It does nothing for the unemployed. It does nothing for seniors and for those who are struggling.  Instead, it gives an enormous multi-billion-dollar gift to the big banks that have just declared that their profits have doubled.  As well, instead of pursuing sustainable development, they cancel environmental assessment in Canada. It's not a budget that we can support."

Liberal leader Michael Ignatieff confirmed that his party will not support the Budget either: "We can't support this budget. And so we are going to be voting against it in the House but not in sufficient numbers to bring an election on. Canadians don't want an election. What they want from me is an alternative, an alternative to cuts, freezes and gimmicks and we've been working hard on that alternative."

On the whole it appears that the budget strikes a reasonable balance between stimulus to a fragile economic recovery and budgetary restraint to move away from structural deficit. There will be a damper on the growth of government, which has been increasing it's footprint on Canada at a rapid pace for the past ten years. Some special interests will probably be hurt; however, the job of responsible government is to be reasonable with the public purse.

Jana Paskova  

PMO photo by Jill Propp